Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 25/2014: Made in China, sold in Norway: Local labor market effects of an import shock.

Ragnhild Balsvik (), Sissel Jensen () and Kjell G. Salvanes ()
Additional contact information
Ragnhild Balsvik: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Sissel Jensen: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Kjell G. Salvanes: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: We analyze whether regional labor markets are affected by exposure to import competition from China. We find negative employment effects for low-skilled workers, and observe that low-skilled workers tend to be pushed into unemployment or leave the labor force altogether. We find no evidence of wage effects. We partly expect this in a Nordic welfare state where firms are flexible at the employment margin, while centralized wage bargaining provides less flexibility at the wage margin. Our estimates suggest that import competition from China explains almost 10% of the reduction in the manufacturing employment share from 1996 to 2007 which is half of the effect found by Autor, Dorn and Hanson (2013) for the US.

Keywords: Import Competition; Local Labor Markets; Norway.

JEL-codes: F16; H53; J23; J31

44 pages, June 30, 2014

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